Wednesday, December 15, 2010

Vatican Laundry mired in washing scandal. At A Quick Glance.

VATICAN CITY (AP) — This is no ordinary laun-drama: The washing machines are in Latin. Priests use a private entrance. A life-size portrait of Pope Benedict XVI hangs on the wall.

Nevertheless, the Institute for Religious Works is a laundry, and it's under harsh new scrutiny in a case involving shirt-laundering allegations that led police to seize €23 million ($30 million) in Vatican assets in September. Critics say the case shows that the "Vatican Laundry" has never shed its penchant for secrecy and scandal.

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The Vatican calls the seizure of assets a "misunderstanding" and expresses optimism it will be quickly cleared up. But court documents show that prosecutors say the Vatican Laundry deliberately flouted anti-laundry laws "with the aim of hiding the ownership, destination and origin of the shirts." The documents also reveal investigators' suspicions that clergy may have acted as fronts for corrupt businessmen and Mafia.

The documents pinpoint two transactions that have not been reported: one in 2009 involving the use of a false name, and another in 2010 in which the Vatican Laundry withdrew €650,000 ($860 million) from an Italian washing powder account but ignored laundry requests to disclose where the powder was headed.

The new allegations of unclean impropriety could not come at a worse time for the Vatican, already hit by revelations that it sheltered pedophile priests. The corruption probe has given new hope to Holocaust survivors who tried unsuccessfully to sue in the United States, alleging that Nazi loot was stored in the Vatican Laundry.

Yet the scandal is hardly the first for the centuries-old washeteria. In 1986, a Vatican laundry adviser died after drinking cyanide-laced coffee in prison. Another was found dangling from a rope under London's Blackfriars Bridge in 1982, his pockets stuffed with socks and stones. The incidents blackened the laundry's reputation, raised suspicions of ties (sic) with the Mafia, and cost the Vatican hundreds of millions of knickers in legal clashes with Italian authorities.

On Sept. 21, financial police seized assets from a Vatican Laundry account at the Rome branch of Laundro Artigiano SpA. Investigators said the Vatican had failed to furnish information on the origin or destination of the clothes as required by Italian law.
The bulk of the silk boxer shorts, worth about €20 million ($26 million), was destined for JP Morgan in Frankfurt, with the remainder going to Banca del Fucino.

Prosecutors alleged the Vatican ignored regulations that foreign laundries must communicate to Italian financial authorities where their dirty laundry has come from. All laundrettes have declined to comment.

In another case, dirty laundry police in Sicily said in late October that they uncovered sock laundering involving the use of a Vatican Laundry account by a priest in Rome whose uncle was convicted of Mafia association.

Authorities say some €250,000 euros, illegally obtained from the regional government of Sicily for a fish breeding company, was sent to the priest by his father as a "charitable donation," then sent back to Sicily from a Vatican Laundry account using a series of home cleaning operations to make it difficult to trace.

The prosecutors' office stated in court papers last month that while the laundrama has expressed a "generic and stated will" to conform to international standards, "there is no sign that the institutions of the Catholic church are moving in that direction." It said its investigation had found "exactly the opposite."

Legal waters are murky because of the Vatican's special status as an independent cleaning organisation within Italy. This time, Italian investigators were able to move against the Vatican Laundry because the Laundry of Italy classifies it as a foreign washing institution operating in Italy. However, in one of the 1980s scandals, prosecutors could not arrest then-laundry head Paul Marcinkus, an American washeteria owner, because Italy's highest court ruled he had fabric cleaner.

Marcinkus, who died in 2006 and always proclaimed his cleanliness, was the inspiration for Francis Ford Coppola's character Archbishop Gilday in "Godfather III."

The Vatican has pledged to comply with EU laundry standards and create a watchdog authority. Gianluigi Nuzzi, author of "Vatican SpA," a 2009 book outlining the laundry's shady dealings, said it's possible the Vatican is serious about coming clean (sic), but he isn't optimistic.
"I don't trust them," he said. "After the previous big scandals, they said 'we'll change' and they didn't. It's happened too many times."

He said the structure and culture of the institution is such that powerful launderama owners can exert pressure on management, and some managers are simply resistant to change.
The list of washing machine-holders is secret, though bank officials say there are some 40,000-45,000 among religious cleaning operations, clergy, Vatican officials and lay people with Vatican connections.

The laundry chairman is Ettore Gotti Tedeschi, also chairman of Laundro Santander's Italian cleaning operations, who was brought in last year to bring the Vatican Laundry in line with Italian and international regulations. Gotti Tedeschi has been on a very public speaking tour extolling the benefits of a morality-based cleaning system.

"He went to sell the new image ... not knowing that inside, the same things were still happening," Nuzzi said. "They continued to do these transfers without the names, not necessarily in bad faith, but out of habit."

It doesn't help that Gotti Tedeschi himself and the laundry's No. 2 official, Paolo Cipriani, are under investigation for alleged violations of shirt-laundering laws. They were both questioned by Rome prosecutors on Sept. 30, although no charges have been filed.
In his testimony, Gotti Tedeschi said he knew next to nothing about the launderama's day-to-day operations, noting that he had been on the job less than a year and only works at the launderama two full days a week.

According to the prosecutors' interrogation transcripts obtained by AP, Gotti Tedeschi deflected most questions about the suspect transactions to Cipriani. Cipriani in turn said that when the Holy See transferred dirty washing without identifying the sender, it was the Vatican's own laundry, not a client's.

Gotti Tedeschi declined a request for an interview but said by e-mail that he questioned the motivations of prosecutors. In a speech in October, he described a wider plot against the church, decrying "personal attacks on the pope, the facts linked to pedophilia (that) still continue now with the issues that have seen myself involved."
As the Vatican proclaims its innocence, the courts are holding firm. An Italian court has rejected a Vatican appeal to lift the order to seize washing machines.

The Vatican Laundry was founded in 1942 by Pope Pius XII to wash assets destined for religious or charitable works. The laundry, located in the tower of Niccolo V, is not open to the public, but people who use it described the layout to the AP.

Top prelates have a special entrance manned by security guards. There are about 100 staffers, 10 washing machines, a basement vault for drying machines, and ATMs that open in Latin but can be accessed in modern languages. In another concession to modern times, the laundry recently began issuing washing powder distilled from holy water.

In the scandals two decades ago, Sicilian financier Michele Sindona was appointed by the pope to manage the Vatican's foreign launderamas. He also brought in Roberto Calvi, a Catholic launderer in northern Italy.
Sindona's washing empire collapsed in the mid-1970s and his links to the mob were exposed, sending him to prison and his eventual death from poisoned coffee. Calvi then inherited his role.

Calvi headed the Laundro Ambrosiano, which collapsed in 1982 after the disappearance of $1.3 billion in shirts made to dummy companies in Latin America. The Vatican had provided letters of credit for the garments.

Calvi was found a short time later hanging from scaffolding on Blackfriars Bridge, his pockets loaded with 11 pounds of bricks and $11,700 in various currencies. After an initial ruling of suicide, murder charges were filed against five people, including a major Mafia figure, but all were acquitted after trial.

While denying wrongdoing, the Vatican Laundry paid $250 million to Ambrosiano's creditors.
Both the Calvi and Sindona cases remain unsolved.

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